Greece - All posts tagged Greece

The focus is on Greece and its ailing banking sector as European Central Bank President Mario Draghi holds a news conference. We’ll be live-blogging all the action right here.

8:20 am (EDT)

Greek banks have been closed for more than two weeks, surviving--just barely--on a drip feed of liquidity. The key question is when will the ECB allow an increase in liquidity assistance.

It's going to take a clear political commitment by Greece's eurozone creditors to keep the country solvent and to recapitalize the banking sector, says UniCredit chief economist Marco Valli. But assessing when that condition is met is a "matter of judgment."

Here’s a recap of Mario Draghi’s news conference and the market reaction.

8:17 am (EDT)

Bond-buying pace under scrutiny

William Watts

Expect Mario Draghi to get some questions seeking more clarity about ECB Executive Board member Benoit Coeure’s announcement last month that the central bank would “front load” bond purchases in May and June in anticipation of slow market conditions in July and August. The remarks caused a lot of turmoil even though ECB officials had previously indicated such a wrinkle was possible. The remarks were nonetheless seen as a signal that the ECB has no intention of ending its bond-buying plan early despite improving economic data and signs of inflation.

The remarks also caused controversy due to the fact that they were delivered to a closed-door gathering of bigwigs, including hedge-fund managers, and then released to the public the next day—a move the ECB said was in error.

It’s been a little over six years since the wheels started falling off the global economy, and while stock markets are up and unemployment is down in many countries, most citizens are still stuck in a mire of doom and gloom.

Whether it was an advanced, emerging, or a developing economy, respondents in most countries took a dim view of their economic situation, according to a Pew Research poll conducted from March to June.

Euroskeptics are poised to win more seats in this year’s European Parliamentary elections than in any other years of voting. That change that could prompt reaction in the financial markets, which have largely brushed off past results of the regional political contest.

Polls show that nearly one-third of the 751 seats in the Parliament will be won by euroskeptic parties, which have seen an increase in popularity in the wake of the financial crisis that began to rock markets full-force in 2008.

In that light, key results will likely come from Greece, where the far-left Syriza party leads in the polls.

Greece returns to the financial markets for the first time since 2010 with a long-term bond sale on Wednesday. But the country still grapples with an unsustainable debt level, high unemployment and sluggish growth.

“This doesn’t suggest Greece is out of the woods yet, but it is an important milestone for a country that has been under the oversight of the EU and IMF,” said Timo del Carpio, European economist at RBC Capital Markets.

The yield on 10-year Greek government bonds dropped below the psychologically important 7% level this week, in the latest sign confidence is restored in the euro zone. Risks remain, however, and governments still need to follow through with reform programs.

Mark Mobius, executive chairman of Franklin Templeton’s Templeton Emerging Markets Group, is ready to wade back into Greek stocks because of the country’s potential for economic growth.

He is looking to make a move on Greek stocks within a year, which would mark the end of a more than decade-long hiatus from Greece, according to The Wall Street Journal.

Bloomberg

Mark Mobius

That’s a shift from his view in August, when Mobius told MarketWatch he thought Greek stocks were relatively expensive, excluding bank stocks. The ASE Composite Index has gained about 25% since Aug. 1 to 1,196.84 on Monday.

It seems like an odd pronouncement for a politician on the campaign trail, but German Finance Minister Wolfgang Schaeuble isn’t exactly known for sugar-coating things. According to news reports, Schaeuble, campaigning on behalf of his and Chancellor Angela Merkel’s Christian Democratic Union near Hamburg, told an election rally: “There will have to be another program for Greece.”

Greece is back in the news Friday. A deadlock over whether to shut down the state broadcaster is eliciting fresh fears that the government coalition could fall apart.
Those fears have helped push bond yields up dramatically.

Already beset by a sell off across emerging markets, Greek bonds continued to slide Thursday as the political machinations played out. An International Monetary Fund threat to stop its aid to Greece also hit bonds.

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